CAIRO: Ahmed El-Baradei, former head of Banque Du Caire's, recent statements to the press have stirred controversy over the true reasons behind the government's decision to privatize the 55-year-old state-owned bank. In an interview with Al-Masry Al-Youm newspaper, El-Baradei asks those who "misappropriated public funds where has all the money gone? Cabinet recently unveiled plans to sell 80 percent of Banque du Caire in an auction and float another 15 percent on the stock exchange within a year. This decision had sparked a heated debate about the sudden decision, the reasons behind selling the bank, as well as fears of selling it to a foreign entity. But in a press conference last week Central Bank of Egypt (CBE) Governor Farouk El-Okda said the decision was not sudden and was decided six months ago. The parties involved preferred to keep the deal confidential as the decision involved negotiations with regional and African central banks. Last week Al-Masry Al-Youm had reviewed a report by the Central Auditing Agency on the performance of Banque Du Caire in 2003-04, accompanied by Baradei's picture, but without interviewing him. The article encouraged the former banker to speak up about how the bank was suffering from debt and budgetary issues before he was appointed. An official at the CBE, who preferred to remain anonymous, told Daily News Egypt that El-Baradei's comments are only natural in light of the current situation. "Banking is a sensitive issue these days and everyone has to defend himself, even if no one accuses him directly. El-Baradei claims that during his time at the bank, he had tried to deal with 46 "important businessmen regarding their loans that were worth over LE 25 billion that comprised 74 percent of the bank's transactions. "Four months after I was appointed it was obvious to me, and I reported to officials, that at least LE 4 billion were a lost debt, he said. In February 2002, El-Baradei asked officials for around LE 200 million to improve the bank's foundations, including its human resources, to enable him to deal with the deficit and debt issues the bank was experiencing. However, despite his efforts he was unable to solve the issue of approving loans only to "a preferred few, especially without the general assembly or the government's support. El-Baradei claims he tried to enhance the bank's performance, tackling other angles, especially after the CBE refused to provide him with LE 6 billion to solve the hanging debt issue. He established a new program to fund small businesses, hence creating a new sector with 800 employees who were doing nothing before, and bringing in 130,000 Egyptian clients. CBE officials refused to comment to Daily News Egypt regarding withholding money from El-Baradei to improve the bank's conditions, saying that if a formal investigation is held, the truth will be revealed. Despite efforts to improve the bank's performance and statements announcing that the bank's financial results last year showed profits, the loan burdens still prevailed, leading experts to believe that the bank cannot continue on its own and recommend merging it with Banque Misr. Minister of Finance Youssef Boutros Ghali explained that initially a merger was seen as the right step to take. However, after analysis, they realized that many branches of both banks were close to each other, which meant either closing some down or allowing them to negatively affect Banque Misr's operations. Minister of Investment Mahmoud Mohieddin also supported selling the bank, saying that public management of banks was a failure since state-owned banks lose one percent of their market share annually due to the fierce competition. According to the government, the main reasons behind the sale are lack of qualified banking experts, overstaffing, weak control and risk management, in addition to the well known heavy non-performing loan burden. "No matter what is said now, this will not change the fact that the bank will be sold. The reasons could vary, but it is the same ending, the CBE official said.
